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The business case for electric trucks

CALIFORNIA (Axios): New analysis finds a glass basically half-full when it comes to long-haul electric trucks — the long-term economics already look good, but stronger policy still matters.

The big picture: “[D]ramatic declines in battery prices and improvement in their energy density have created opportunities for battery-electric trucking today that were seldom anticipated just a few years ago,” states the working paper from researchers with Lawrence Berkeley National Laboratory and the University of California.

By the numbers: The top-line findings are that Class 8 electric trucks — that is, really big freight movers — have a 13% lower “total cost of ownership” per mile and provide about $200,000 in savings over the vehicle’s life compared to diesel models.

That comparison assumes an electric truck with 375 miles of range driven 300 miles per day, with a very small payload capacity disadvantage compared to diesel.

That’s based on a current average battery pack price of $135 per kilowatt-hour (though that assumes procurement “at scale”), and the analysis notes that battery costs are projected to be less than half that amount by 2030.

Why it matters: Heavy trucks are an important source of greenhouse gas emissions and air pollution.

The study notes that Class 8 trucks account for about 20% of all U.S. transportation sector energy consumption, i.e., they’re a big deal.

The study comes as several automakers — ranging from Tesla to lesser-known startups to heavyweights like Daimler and Volvo — are moving into the nascent electric long-haul trucking market.

Meanwhile, California regulators are requiring that zero-emissions models account for a growing share of heavy truck sales, while the Biden administration also hopes to spur new deployment of cleaner transport.

Yes, but: Here’s where policy comes in. Lower lifetime costs are not enough, on their own, to spur a large-scale commercial shift.

Upfront costs for electric models are still much higher than their diesel counterparts — about 75% higher for the 375-mile range vehicle they modeled.

“This price differential is not expected to last long, but strongly suggests the need for early-adopter subsidies to drive sales, and lower capital costs through manufacturing economies of scale,” they note.

Other policy drivers, they say, can include binding sales targets, incentives linked to battery price declines, and “dynamic” electricity pricing systems that incentive charging during periods when wholesale costs are low.

Of note: Like any study, the results can’t replicate what real-world conditions will be in the future.

Their modeling, for instance, does not estimate future changes in diesel or electricity prices.